The federal courts have heightened the specificity with which plaintiffs must plead their cases, notably when it involves trade secret litigation. A recent misappropriation of trade secrets decision serves as a warning that pre-filing investigations of departing employees’ actions are vitally important.
In U.S. Bank v. Parker, a former employee from the Bank’s wealth management group resigned and joined a competing group. The employee signed a Confidentiality and Non-Solicitation Agreement while at the Bank. The agreement barred her for one year from contacting the Bank’s clients to solicit business. She was also obligated to immediately return all confidential information concerning the Bank’s clients and business when she resigned.
The Bank filed suit for breach of contract, tortious interference with business, and misappropriation of trade secrets. It alleged “on information and belief” Parker violated her agreement by contacting clients. The bank also claimed Parker failed to return the Bank’s confidential information.
The Bank immediately faced problems. Because its complaint failed to allege specific instances of Parker contacting clients or identify the confidential information she misappropriated, the court granted Parker’s Motion to Dismiss the case. The court held merely “believing” Parker may have violated the agreement was too speculative.
Comprehensive trade secret programs, substantive exit interviews, and pre-suit investigations are vitally important to trade secret protection and protecting other confidential business information. Furthermore, with the heightened pleading standards, employers must develop facts supporting misappropriation, and not rely on speculation.
For more information regarding trade secret litigation and protecting your business and its confidential information, contact a trade secret lawyer or business lawyer at Rogge Dunn Group.